Case Research of California Pizza Kitchen

Rick Rosenfield and Larry Flax began California Pizza Kitchen in 1985 it was in Beverly Hills, California. Today, California Pizza kitchen has over 250 shops which are around the globe; the group is still operated by the original founders. Most of the CPK's restaurants are located in California, and the rest can be found some in the us and others in Asia, Midsection East and THE UNITED STATES. California Pizza kitchen has franchised about 50 shops which bear CPK name. California Pizza kitchen creates profits from the restaurant which in most cases has very low profit margins that is brought on by the expense of goods being high. CPK is also known to generate higher revenue through a recent franchise contract with the Kraft foods company, for Kraft food to create and distribute a few of the premium frozen pizzas associated with CPK. The Kraft franchise revenue creates 1% of CPK total twelve-monthly revenues, earnings from the other franchise income is approximately 0. 72% of the full total earnings and the restaurant sales income is approximately 98. 31%.

California Pizza Kitchen is in the foodservice industry, Foodservice is the deal of food and beverages for them to be immediately consumed, this is in the premises where these were bought, or in place which is designated for eating and can be distributed to other foodservice suppliers. California Pizza Kitchen works restaurants and thus the NAICS code for the industry is 722110.

Background and Assumptions

Pizza is an extremely popular food in America, it is also a very favorite food and it transcends all demographics and it appeals almost all ethnic preferences. California Pizza Kitchen is known to sell fresh and the high quality pizza products. California Pizza Kitchen offers various types of pastas, entree-size salads and soups that are freshly made plus they all fulfill all likes (Flax and Rosenfield 1999). California Pizza kitchen is a favorite restaurant that is based in California, there is much more room for enlargement of California Pizza Kitchen both in America and internationally. The America together can without any strain have the ability to support over 3, 000 models. This is because Pizza is a popular dish for those Americans and California Pizza Kitchen has generated a huge name by providing them.

5 Pushes in Porter's Model for CPK

The Risk of New Entrants - (Modest FACTOR) That is one area which places California Pizza Kitchen under great pressure. There are some barriers to entry in the restaurant industry, but there's also many things which make it easy for one to enter the restaurant industry. This places California Pizza Kitchen under frequent pressure to allow them to differentiate themselves total the other competition or other restaurants that surround them. Before people spend money on food, they have to consider other restaurants to allow them to decide. There is a higher variety of substitutes in the restaurant industry, these is mostly caused by the low barriers to accessibility.

There are numerous small barriers that would deter a business from going into the restaurant industry. Three major obstacles that are faced by new entrants in to the restaurant industry are; the ever before growing prices of food, the economies of level, and the heavy competition anticipated to there being very many restaurants in the market. These barriers are not difficult to cope with like the government-enforced barriers which are very difficult to the new entrants into the market, but the barriers can still deter one from coming into the market. Although industry has some barriers, there are also some areas of this industry that make it very attractive to investors. Some of these attractive components of the industry include; there are low advantage requirement, there is a whole lot of suppliers, the levels of capital required by the business is low of capital and the inability of organizations to establish true competitive benefit over the rivals.

Even though there are extensive elements which make it not easy to get into the industry, there are far more elements which make it easier to get into the industry. As everyone can quite simply compete which is not as expensive as other establishments are. It has obligated California Pizza Kitchen to continuously be very ground breaking in the strategy of marketing that they utilize. This helps those to be better than the rest and so grow their market share.

Bargaining Vitality of Suppliers - (LOW FACTOR) the suppliers in the restaurant industry do not keep much electric power as there are many suppliers who provide you with the same products. In the restaurant industry there are quite a number of substitutes which can be adequate available, this causes the buyer to holds power. In the industry there are a number of suppliers who will vary who can provide comparable products, this can help to provide the buyer with an increase of vitality than the suppliers. Another circumstance is that in the restaurant industry suppliers goods are important to the customer business success; in this case the distributor has electric power over the customer. Minus the right foods being supplied to California Pizza Kitchen the business will achieve little success. A lot of the products that are provided to the restaurant industry are standardized, and therefore the suppliers hold electric power. Like others in the restaurant industry, the food products provided to California Pizza Kitchen are standardized. It really is good to notice that both suppliers and California Pizza Kitchen carry some sort of capacity to each other. Though California Pizza Kitchen does not hold much electric power but it can affect how suppliers operate.

Bargaining Ability of Clients - (HIGH FACTOR) For California Pizza Kitchen, who are in the food service industry, buyers have a certain amount of ability that they wield. The clients or the customer is a representation of California Pizza Kitchen's customers and the business presents California Pizza Kitchen. The Deal of products that California Pizza Kitchen offers, accounts for a high part of the seller's revenue, and so the buyers carry and wield electric power. The meals service industry greatly relies on the huge amounts of buyers on their behalf to purchase to purchase products. California Pizza Kitchen relies heavily on its customers to make purchase for the business to expand. If customers make a decision never to buy products from California Pizza Kitchen, there is a high probability that the business would face personal bankruptcy. On the market customers are fragmented and so have little influence on the particular product or its price in the industry as a result of the the industry or provider holds the energy. In the food service industry consumers are very much fragmented and it is very hard for an individual to carry significant part of purchases on the market. But the customers do have a whole lot of impact on the product offered and price forwarded. No firm are able to ignore the buyer to allow them to achieve success.

Threat of Substitute Products - (HIGH FACTOR) the restaurant industry has high threat of substitute products which is exactly what California Pizza Kitchen has to face every day. Due to the high danger level, California Pizza Kitchen must take fee in the food products but also in the prices they offer to their customers. If California Pizza Kitchen offers high price products with their customers it'll result in the client buying substitute products. The top problem is that California Pizza Kitchen may most likely not have the specific substitute the customer wants which will mean the establishment loosing the client. A number of the substitutes include; Beef patties for burgers- chicken patties, veggie patties, etc California Pizza Kitchen helps to keep being competitive and reduce the risk of alternative products by the company creating a menus that offers a very wide selection of foods. Also the meals in the menu is fairly priced for all the dishes. By California Pizza Kitchen offering variety of foods in their menu and also competitively costs their food, California Pizza Kitchen reduces the danger from alternative products significantly.

Rivalry - (HIGH FACTOR) Rivalry in the others industry is very big anticipated to a lot factors which can be mainly there being a big number of organizations in the restaurant industry. A lot of the firms compete for the same market and this creates an enormous have difficulties for organizations to produce a mark in the industry. Rivalry is also brought about by other factors such as the consumers cooking at home rather than buying from restaurants. Some conditions in the present day society where people choose to eat in restaurants so as to save well on time are making the industry to develop and with the reduced barriers to entering the industry, there's been a major increase in rivalry amongst associates (Charlie 2005). Also there may be very little differentiation in the products that are offered in a variety of restaurants.

CPK Infestations Analysis

Political - There are various aspects you have to consider in the restaurant politics environment. You have to consider the many regulations that affect the restaurant business. This can a cause for extra expenses, additional time and can be difficult for those who are not experts in the industry. The laws that impact the restaurant industry include; labor laws and regulations, taxation, food safety and other laws. The law on food safe practices is very specific to this industry and has guidelines for each kind of food that is prepared (Applegate and Johnsen 2007). It could require training for employees and also a license showing you have abided with regulations. Other laws and regulations such as taxation may necessitate one to work with an accountant. Other issues that happen to be political in character are the issue of genetically improved food and also the way the impaired people are treated in the population.

Economic - The restaurant industry was not very much influenced in the recent market problems and it was bearing with it perfectly. With consumer spending having reduced, the restaurant industry is very little affected as it's the last place most individuals are willing to cut. A survey conducted by the National Restaurant Association confirmed that, "Forty-five percent of these surveyed said restaurants are an important part with their lifestyle. One in three said they would like to eat away, buy takeout, or have food shipped more often. Quite simply, customers are cutting back, but reluctantly. So there's a lot of pent-up demand that can be tapped into with the right formulation" (Lesonsky, 2009). California Pizza Kitchen should capitalize upon this continue being proper in their market topic. You will find other economic factors that are impacting California Pizza Kitchen you need to include; the employment issues in which a lot of men and women have no jobs and so have little to spend, increase in the construction and supply costs, and there is also the rise in expense of food which influences the restaurant margins and prices (Spain 2010).

The food service industry has hired around nine percent of the American labor force. The industry is also four percent of the Gross Household Product, and thus has a major contribution and impact in the American overall economy. Due to rising labor costs and also the establishment of new restrictions and guidelines on workers and conditions of working, it'll significantly impact the Restaurant industry in the us.

Social - Restaurants are now faced with the concerns of making sure they may be conversant with the health and also environmental concerns. Restaurants must ensure that all the meals that is prepared for the consumers must be free from contamination and healthy. Also safety precaution such as open fire training and preparedness is usually adhered to b all restaurants. Also restaurants are petitioning Congress to ensure that food is safe, "The Country wide Restaurant Association and its own members are increasingly engaged not only in making sure safe food preparation inside the restaurant, but in driving changes all the way again through the supply chain, to take on a more influential role across the whole life circuit of food" (Donohue, 2009). Addititionally there is the factor that restaurants should ensure that they buy local produce. Also with the high rate of obesity in America restaurants are available foods with low calorie and healthy.

Technological - has a large role in the restaurant industry. In order for organizations to reach your goals and become competitive they must be up to night out with technology. The Point-of-Sale system (POS) is a new technology which has been employed by most restaurants to be able to be competitive and helps in effective management of food. Also companies are investing in the online buying of food by consumers.

California Pizza Kitchen has a competitive advantage over its competitors because of its size as a company. The group has over 250 outlet stores in America only and so it will procure in large as is in comparison to its small rivals who have a few outlet stores. By purchasing in volume the price of the products will be suprisingly low and also California Pizza Kitchen will love the services of prices being sold at a set rate over the certain period of time. This will help California Pizza Kitchen to plan well and can not be damaged by the rising prices of food. Because of its size California Pizza Kitchen it enjoys huge earnings might and thus can employ more resources in boosting its distribution channels as well as marketing this might be a problem to almost all of its rivals (Jackson 2003).

Marketing Mix

TWO PRIMARY Traits - Some of the key components of a good business strategy are availableness and quality. Concepts of efficiency within an organization and in conjunction with quality, will assist an organizations to attain service performance and also excellence. Organizations today need to control their continuous improvements to be able to achieve a breakthrough in quality which will meet up with the customer's prospects and requirements. Quality products have been determined to promote culture change amidst consumers and also encourage organizational to be dedicated and participation in the customer satisfaction (Ayers and Ann 2008). Restaurants must development something excellence approach that will assist to identify the customer requirements and ensure there may be anchored performance improvement in all restaurant operations.

California pizza Kitchen is a favorite casual dining chain that has its shops around America and other outlets are in other international market segments. California Pizza Kitchen is a brandname that has trim a niche for quality and supply. This has powered their markets and sales and has added to the development of earnings for the business. California pizza Kitchen restaurants are in the business of ensuring they serve food to their customers. Therefore they are simply providing something which is food and a service which is waiting on the customer. Quality food and service is can be defined as meeting or surpassing the client expectations as is well known of the restaurant. Top quality food and quality services will be the key to client satisfaction. Quality services are a benefit to the business as it ensures that the customer will returning again to the business (Wentz 2008).

Availability in an enterprise is how easily you can be capable of geting the products and services of California pizza Kitchen. California pizza Kitchen is a company which is common to all or any customers. They have got tens of outlets all over America and they have moved into into contract with Kraft Food to ensure that their products are written by Kraft Food and everything People in america can have buy their products. California pizza Kitchen has also franchised tens of outlets which sell the same products as other California pizza Kitchen outlet stores at the same price and quality.

THE PRIMARY TARGET MARKET - Pizza is a very popular food in America, it is also an extremely favorite food and it transcends all demographics and it appeals virtually all ethnic tastes. California Pizza Kitchen may sell fresh and the high quality pizza products. California Pizza Kitchen also offers various types of pastas, entree-size salads and soups which are freshly made and they all gratify all tastes. California Pizza kitchen is a popular restaurant that is situated in California, there is much more room for development of California Pizza Kitchen both in the us and internationally. The America by themselves can without the strain be able to support over 3, 000 items. This is because Pizza is a popular dish for those People in the usa and California Pizza Kitchen has generated a big name by retailing them.

PRODUCT CATEGORIES - California Pizza Kitchen is in the foodservice industry, Foodservice is the sales of food and drinks to allow them to be immediately used, this can be in the premises where they were bought, or in place which is selected for eating and can be shared with other foodservice suppliers. California Pizza Kitchen works restaurants and so the NAICS code for the industry is 722110. California Pizza Kitchen is experienced with the advertising of pizzas all over America. They also offer various varieties of pastas, entree-size salads and soups that are freshly made plus they all fulfill all preferences.

PRODUCT-MARKET GRID - it is used in market penetration. California Pizza Kitchen is in the business of advertising Pizza without any particular target market as every American loves Pizza. Therefore for in market California Pizza Kitchen to permeate the market it need to produce brand commitment and diversification of its product. California Pizza kitchen has sufficiently penetrated the American market but there is more room for improvement. This can be achieved through better distribution, a better consumer purchasing ability, and also over head sharing by the business.

ADVANTAGE - California Pizza Kitchen has a competitive advantage over its competitors due to its size as a corporation. The group has over 250 outlet stores in the us only and so it will procure in bulk as is in comparison to its small competition who have a few stores. By purchasing in mass the price tag on the merchandise will be very low and also California Pizza Kitchen will love the services of prices being sold at a set rate over a certain period of time. This will help California Pizza Kitchen to plan well and will not be damaged by the growing prices of food. Due to its size California Pizza Kitchen it relishes huge revenue might and thus can utilize more resources in enhancing its distribution channels as well as marketing this might be a challenge to the majority of its competitors.

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